The Merchant wrote:@erifloss...do you have an illustration you could use to illuminate us further? Thanks.
@Gordon Gekko, the 150k is not a relief but an amount allowable for deduction before taxation.Difference being a relief is deducted from the tax payable while an allowable is deducted from the income taxable.
Say you earn 150K pm gross & out of the 150k you are making a repayment of 50k(13k being int), What happens is when PAYE calculations are being done it will be on 137.5K & not 150K or 100K as some may think. This benefit can only be enjoyed when the premises is taken as 'owner occupied' & can be only be for one premises though one can beat this by registering another premises under the wife as the law changed & ones wife can now make her own tax returns. On this one actually makes a tax saving of around 4K pm on the 150k income.
Saving to build or buy a house with a registered firm is also good as one is allowed for tax purposes a contribution of 4k pm & any interest you earn on these deposits not exceeding 3m are tax exempt thus no withholding tax is deducted on the interest.Though guys are trying to lobby the govt to increase this amount as it does not give the true picture of the real estate pricing in Kenya today.
Actually there are many ways that one can reduce their tax liability to the minimum and save at the same time.
'They say money cannot buy me happiness but when i compare when i had none and now, i'm happier' Kevin O'leary